Life insurance is becoming a security for other people, and when uncertainties strike, protection will be given to their families. But there are two kinds of life insurance, that is traditional life insurance and variable life insurance. So how are you going to choose which life insurance you will purchase?
First, let us discuss traditional life insurance. Traditional life insurance is insurance with a guaranteed cash value and protects your whole life where the premium stays the same. The protection is until age 100 or a lifetime and matures at age 100 of the insured. There is a policy of this life insurance to receive a dividend that you can use to buy another renewable insurance. You can also receive a return of excess premiums. A policy does not accumulate cash values, and the only death benefit is provided when the insured passes away. Therefore, this policy’s premium is very least compared to other policies of traditional life insurance. There is also a policy wherein the protection is provided at a specified period, and the plan’s maturity is at the end of the coverage period.
Traditional life insurance can be payable up to the age of 100 or to a specific period, such as ten years or 20 years, or up to 65. The premium is payable yearly, quarterly or monthly. You can not pay a higher or lower premium than the indicated amount in your policy. You should continue paying the policy as there is no premium holiday for traditional life insurance.
Variable life insurance is life insurance with a death benefit and allows the policyholder to invest and alter the insurance coverage. The features of variable life insurance are those policies that can be used for investment as a source of regular savings and protection. Variable life insurance has the flexibility that the policyholder can increase or decrease its premium. A withdrawal can be made if there are available funds. Funds can be switched from one fund to another. There is a premium holiday and a single premium top-up. The risk of investment for variable life insurance is more significant as it has greater exposure to equity investment, but there is a potential for higher returns.
If you are unsure of which life insurance suits you, assess yourself. If you think you are into investing for the potential of higher returns, get life insurance that caters to investment and protection. On the other hand, if you are a conservative type of funding and do not want a higher risk but prefer a more steady kind of return, get life insurance that caters more to protection.
